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Ask HN: Anyone else feels the commoditization of real estate is unethical?

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Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#631

Post by [deleted] »

rojobuffalo wrote: post #257
targ65 wrote: post #172

Like another comment here mentioned, housing is complicated. People don't want to live in a random house in the middle of nowhere ('roof over your head'). Some people prefer to be homeless on the street versus getting to a roof over their head that they don't like. People want to live where they want to live (near family, jobs, culture etc) Take NYC for instance. Politicians try to address the NYC housing crisis from…

I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that wou…

[deleted]

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#632

Post by LadyCailin »

AYBABTME wrote: post #508
rojobuffalo wrote: post #257

Earlier quoted context omitted.

I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that wou…

This falls flat on its head when you consider that this would force a bunch of people in becoming small time landlords, with the inability to invest in their skills and competency by scaling up to multiple properties. Barely anyone would be interested in running multi-family real estate and they would migrate to commercial real estate. What would remain for residential is low density condos and shitty small time land…

But the underlying point here (I think) is that people owning one home is higher priority than owning multiple homes. I’m not contradicting either of you, but it feels like you responded to a different question.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#633

Post by _8j50 »

anamax wrote: post #535
_8j50 wrote: post #350

Earlier quoted context omitted.

Sellers themselves would be incentivized to make their house in good condition to sell it at a profit. If all they do is renovate then that should be a service to the original seller. If your house is devalued by 20% when selling, you pay a renovator to fix it up and take 50% of profits so instead you only lose 10%. Like you said they provide a service, they could handle the sale as a real estate agent and get more p…

> Sellers themselves would be incentivized to make their house in good condition to sell it at a profit Many sellers don't want to do this. Consider someone who inherits their parents house, 1000 miles away. The house needs renovation. You want them to uproot their lives or find a "service provider" (1000 miles away) instead of just doing an "as is" sale to someone who will do the renovation and sell it. Sellers want…

Flippers are selling for profit so they will not sell until the market is suitable that means an incentive to artificially raise prices because as you point out flippers don't just want out unlike residents.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#634

Post by [deleted] »

smt88 wrote: post #5

I definitely do. It's something that turns a basic necessity into a speculative asset, with a price distorted by the money poured into it. Airbnb is also a deeply harmful influence on housing prices. Imagine if we did the same thing with, say, water: privatized it and then "democratized" ownership of it. It's easy to get retail investors to buy things at inflated, speculative prices, so the price of water would go up…

[deleted]

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#635

Post by jjav »

rojobuffalo wrote: post #257
targ65 wrote: post #172

Like another comment here mentioned, housing is complicated. People don't want to live in a random house in the middle of nowhere ('roof over your head'). Some people prefer to be homeless on the street versus getting to a roof over their head that they don't like. People want to live where they want to live (near family, jobs, culture etc) Take NYC for instance. Politicians try to address the NYC housing crisis from…

I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that wou…

> I would start by making property taxes substantially higher for non-owner-occupied property.

But that in turn means rents would go up substantially since the owner of that unit is now paying a lot more taxes on it because they rent it out instead of living in it themselves.

If the desired goal is to incentivize everyone to own their home and get rid of rentals mostly, that may work. But if there are people who want to rent affordably, it doesn't.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#636

Post by [deleted] »

unlikelymordant wrote: post #194
ramesh31 wrote: post #150

Earlier quoted context omitted.

>I definitely do. It's something that turns a basic necessity into a speculative asset, with a price distorted by the money poured into it The 30 year mortgage is one of the greatest inventions in the history of mankind. Being able to swing hundreds of thousands of dollars of margin on a near-zero-down investment that requires nothing more than proof of income and has a manageable monthly payment is the single most p…

I disagree somewhat. I think the 30 year mortgage has pushed prices up much higher than they would have been, because of the leverage, and people only look at the monthly repayment. The fact that it has led to intergenerational wealth (among the rich who can afford houses) is a direct side effect of the fact that houses are so expensive. It seems like saying it has generated wealth is begging the question.

[deleted]

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#637

Post by [deleted] »

bottled_poe wrote: post #113
hprotagonist wrote: post #17

"I'm not doing any harm," you say. "I just want to keep what I own, that's all." You own! You are like someone who sits down in a theater and keeps everyone else away, saying that what is there for everyone's use is your own...If everyone took only what they needed and gave the rest to those in need, there would be no such thing as rich and poor. After all, didn't you come into life naked, and won't you return naked…

It’s cute, but not a very practical philosophy though. Most valued resources are physically finite. Who decides how beachfront properties are allocated? Who decides who should clean the toilets?

[deleted]

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#638

Post by ItsMonkk »

x86x87 wrote: post #590
ItsMonkk wrote: post #424

Earlier quoted context omitted.

No. Renters are paying for the value of the land and the improvements. If the rental price of the apartment is above that, they won't pay it and find another place. If there are no places they will go homeless. Since landlords are already charging for this value, an increase of taxes does not increase the rents. > every property owner isn't going to operate at a loss So they will then sell. But who would buy at curre…

> If the rental price of the apartment is above that, they won't pay it and find another place. If there are no places they will go homeless. Since landlords are already charging for this value, an increase of taxes does not increase the rents. Nope. Sorry but that's not how it works. If the landlord has to pay 4x tax they will pass some (all) of that increase to the renter. Also, a 4x increase in tax != 4x increase…

> So, say the property is worth 1mil$, and you pay 1% tax. That's 10k. You charge 3k rent. The taxman makes the tax 4%, now you have to pay 40k. You decide to pass 30k to the renter. So now they pay 36k+30k rent per year. 4x tax, 2x rent.

The price of the property is based on the return that the landlord can return. This should be obvious.

If you increase the tax by 4x, the most likely result is the market value will drop from $1 million to something like $250k-500k. The renters will be paying the same value. The new owner will have the same ROI that the previous owner had. Just different buying price and lower return per rental.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#639

Post by jjav »

ItsMonkk wrote: post #333
nrmitchi wrote: post #276

Earlier quoted context omitted.

The biggest thing missed when proposals like that is that not everyone wants to (or does it make sense to) buy a property. Making it 4x more expensive to own a rental property means that rent will be 4x more expensive for those that have to rent. If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.

Not true, but I'm a Georgist so would be against the GP's targeting non-owner tax. Tax everyone according to the value of the unimproved value of their land. I can show you plenty of places with $3k+ rents in SF with prop 13 property taxes that have not changed their tax meaningfully in decades. Taxes have absolutely no effect on what the renter pays. The tenant is always paying the land value. It's just going straig…

> Taxes have absolutely no effect on what the renter pays.

Of course taxes have an effect on the rent price.

If the property tax is very low and the market price rent for that unit is very high, you're right, the owner will charge the high price and pocket the difference.

But the reverse is obviously not true. If the property tax is quadrupled (as per OP proposal) and now the rent no longer covers the ownership costs there are only two possible outcomes: the rent goes up to cover the costs, or, if nobody is willing to pay the new higher rent the owner sells the property off to someone who wants to live in it instead of renting.

The latter is good if we want to incentivize home ownership for everyone. But it does take a former rental unit off the rental market, so if there are people hoping to rent a place, it's bad.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#640

Post by closeparen »

andrepd wrote: post #89
seydor wrote: post #57

Earlier quoted context omitted.

arguing against owning your home is arguing in favor of rent-seeking

The parable is very explicitly contrasting taking what you need / taking one seat at the theatre / owning a home to live in, with taking everything and depriving others of the use of what should be common / taking all the seats at the theatre / hoarding homes to extract economic rent, respectively. I'm 99% sure you understood the point too.

"Taking one seat at the theater" is something any single family owner-occupier could learn from:

- Houses are way bigger than they need to be

- Their footprints are enlarged further by useless setbacks and lawns

- A single household monopolizes this footprint for the entire vertical dimension

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